The Perrysburg, OH-based glass container manufacturer will benefit from the new leadership of Chief Operating Officer Andres Lopez, who is expected to become CEO by the end of the year, analysts at Deutsche Bank said.
The company will need six to 18 months of consistency to gain credibility with shareholders, the analysts noted, adding that Lopez would positively impact corporate culture and strategic focus.
Owens-Illinois has attractive growth opportunities in Mexico through its $2.15 billion acquisition of the Vitro food and beverage glass container business earlier this year, the analysts added.
The deal, completed in September, is expected to add about $0.30 to EPS in the first year.
Deutsch Bank projected 2016 EPS of $2.40 per share for the company, which implies 17% growth year-over-year.
Shares of Owens-Illinois were down 0.72% to $23.28 in early afternoon trading today.
Separately, theStreet Ratings team rates OWENS-ILLINOIS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate OWENS-ILLINOIS INC (OI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OI, with its decline in revenue, underperformed when compared the industry average of 1.9%. Since the same quarter one year prior, revenues fell by 14.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- OWENS-ILLINOIS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, OWENS-ILLINOIS INC reported lower earnings of $0.59 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $0.59).
- In its most recent trading session, OI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for OWENS-ILLINOIS INC is rather low; currently it is at 24.37%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.59% trails that of the industry average.
- Net operating cash flow has declined marginally to $166.00 million or 2.35% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: OI